Leix wrote:Ouch, This is depressing. I'm not sure how to carry the conversation from here. I suppose a defensive statement. I do apologize.
I really want to get this going and I guess what I was looking for is a reassuring pat on the back from somebody experienced like yourself. A false hope? hmm. I suppose the cold truth is better and I appreciate it.
Hey!... being depressed now is a lot better than being depressed later after burning through a ton of cash. And, you are asking questions now, which is a good way to start to get enough information to make a rational decision.
Having no experience about the bureaucracy of running a company is probably my biggest flaw here. It seems like there are a lot more forms than I originally thought. But is it not possible to learn this on the go? Surely there is a list of forms somewhere that are required and some set of instructions on how to fill it out.
You should definitely become familiar with all the nuts and bolts of running a business before proceeding. There is a wealth of information available. But, that's not your biggest "flaw". It's that you don't understand the business that you think you want to get into.
My plan is to enter the architectural visualization market in Singapore (hush hush). It is not a very big market, but there are not very much companies providing these services locally either. Plus, I think there are some room for improvements.
I don't know about this specialty... and... I offer two items for consideration. First, I have a friend in the 3D animated graphics business... he also does other types of graphics work as well. He has seen his business shrink year after year as the industry consolidates. Further, he notes that for most business verticals, good graphics is a hard sell... unlike the USA and EU most local companies are decades behind in advertising and marketing.
Second, there are a ton of real estate ads for new properties... heaps of them. To me, this means there is already a well connected advertising, brand development, and graphics support industry in place to support all the new real estate projects. Now, you probably know a lot more about the discipline than I do, and it would be wise to verify that your niche actually has a chance.
Not getting clients is a scary thought that have crossed my mind countless times. My naive thoughts about this is that If I can provide a better product for a competitive cost, they would simply come. Of course this is a technical challenge and one that I would love to take on. How to produce a better product. This is practically the point that I am banking on.
Unfortunately, simply building a better mousetrap isn't going to have people flocking to your door. Putting up high quality and cheap prices is not going to create the draw you hope. The fact is that professional services are sold on a relationship basis. You will have to displace someone else who has had a working relationship with the client you want to win. I would have never started my business except for the fact that my business partner had an extensive address book of contacts in our industry, which gave us people to visit, as well as generating referral business. So... are you ready to develop a marketing plan, and are you ready to get out and sell?
Plus, are people that prejudiced that they would research on who is running a company to check their nationality and only make deals with locals. Anyway, I am practically local. I speak fluent "Singlish". My close friends are locals. I plan to recruit the local talents as well who, coincidentally, are my friends (which could be a bad idea). The only thing not local about me are on paper.
My only strategy here is to provide a better product at a competitive price and cold calling MNCs in hopes that they will give me a chance. Is this a realistic plan or an "inside guy" is always needed?
It's not about your nationality, it's about your connections into the business community. You are an outsider. Chinese people are very conservative in their social and business networks. There needs to be a very good reason to let you into the network instead of choosing someone that is already there.
Add to this the fact that many businesses have ownership interests by various government entities... Temasek Holdings comes to mind. It is nearly always in the interests on one Temasek owned business to engage another... there are lots of politics and inter-relationships that you will be far away from.
As for MNC's, consider this: As companies globalize their processes, they consolidate. So, while company A might have its accounting and supply chain functions for Asia in Singapore, it's PR and advertising might be in Europe... or maybe Hong Kong.
I'm not saying that you can't make this work. I am saying you better full well understand who it is you are marketing to, how you are going to make your pitch, and how you are going to make your initial contacts.
All you said about computer graphics is spot on. They are moving to cheaper labour countries and places with subsidies (Singapore!). The part about nitpicking the product under the same nickel made me laughed out. Heheh. I am aware of all these problems and having the balls to say no will probably lose you clients. I think there are no way around this and it all boils down on your pipeline and how well and cheaply can you reiterate your product without making a loss. This is a bad business model but one has to adapt. Unless a trade union is formed?
Toothless unions in Singapore. Things are going to get worse. With the clamp down on "foreign talent" work passes, two things are happening. Small businesses are being denied the talents they need to provide support functions for MNC's. And second, with the attempt to drive up salaries for Singaporeans, lots of companies see the handwriting on the wall and are looking for other locations.
Yeah, The EntrePass does look like it is meant for business people that plan to raise funds through VCs and hire a load of local talents. There is even a page dedicated to filling out your business track record. Urgh. I hope they are more lenient on this.
Although Singapore constantly talks about moving up the production chain... from actual production to design and implementation, it seems clear that the Entrepass people didn't get this message. The rules are clearly oriented towards manufacturers, with the expectation that there will be factory space and hired workers to produce a product that is probably going to be exported.
No, if you were going to do this, you would most likely have to form a private limited and then apply for an EP via this company. This is how most service professionals have done it. The catch here, though, is that most of them are experienced and can demonstrate a thriving business that is being moved to Singapore, some on the ground contracts, or at least the potential to generate business. It will be hard for you to demonstrate such things.
Again, not coming from a business background, I fail to see the point of a financial projection. However, I do have one drawn out and that exercise just proves to be futile. Every number that I put down are purely speculative. I am probably just ignorant on this subject. Perhaps you can enlighten me on how this is important.
I cannot overly stress the absolute importance of having a detailed business plan which includes pro forma financial statements, that is, your projections for the future. You will royally f*ck yourself and almost guarantee your failure without one. See my link at
http://www.herberts.org/miscdocs/Sample ... ntents.pdf for an outline of the business plan I used to get my Entrepass.
If your exercise "proves to be futile" then that is a red flag that you do not understand your business. Let's look at this from a couple of perspectives.
a) What are your start up costs going to be? These include your office, equipment, fees, printing. Also include local talent that you will be hiring. You need to also include your own cash needs to support yourself until your company is profitable. Let's say that you have a company cash burn of $5000 per month and you need $5000 per month to survive (which is barely enough, BTW). You expect break even to occur 8 months out. Therefore, you need $80,000, at a bare minimum, just to ensure you can keep the operation going to break even.
b) What does your monthly net corporate income need to be in order for you to support yourself? Let's say it's $5000. What kind of revenues do you need to get a net income of $5000? That depends on your profit margins. What are your planned charges going to be? You want to be cheaper. So, if you are cheaper, than your margins are going to be low. Let's say you hit 20 percent EBITA. In order to earn $5000 on a 20 percent return, you need to gross $25,000 per month.
c) How will you go about selling $25,000 per month? What will your ramp up look like to get to this point? $1,000 the first month, $5000 the second month, etc? What will your average project produce in gross revenues? How long will the project last? How many projects need to be running simultaneously in order to meet your revenue projections? How many sales prospects actually will turn into clients? How many sales leads do you need to have in the pipeline to get enough clients? How much repeat business will you get? So maybe, you figure a project will average $5000. Therefore you need 5 clients per month. You figure you close 1 prospect in 5. Therefore you need 25 prospects to contact per month.
d) Now, it's time to do the market analysis. 25 clients a month is 300 per year. Where will you source 300 per year. How will you contact them? How will you induce them to buy from you. What is your market competition like. What are the factors that could blow up in your face and make your assumptions worthless?
I'll say it again... if you cannot provide reasonable answers to these questions, then you are going to royally f*ck yourself because you are flying completely blind. Maybe you don't like my percentages, or amounts you need to survive. Fine... put YOUR numbers in place and see what your business needs to do. Not being realistic about the financials is a chief reason new businesses fail.
The idea and assumptions about the venture that I have in my head is this;
1) There is a market for ArchViz locally.
2) There is not very many companies that provides this service (locally). In fact, they are going to China for cheaper production.
3) There is room for improvements on the service provided (regionally). It is still far from what European and American companies are providing.
4) If I can bridge that gap in quality locally, the market will respond well.
5) The fundamentals of creating ArchViz is the same as any other CGI. An expansion into broadcast media is totally plausible.
Am I totally off the ballpark here?
1) No have no idea whether your assumption is correct. What market research will you perform to verify this assumption... because.... it's a big one.
2) What makes you think that? And while I'm at it, you want to provide cheap service. How will you compete with vendors out of China?
3) 4) Maybe there is room for improvement but what is YOUR value proposition? Your not selling a commodity product where a market can "respond" to advertising and word of mouth, you're selling a professional service that is almost always referral and cold calls.
5) Sure, anything is possible, but if you don't have the financials to prove that the idea will work, you're doomed
In essense,
I am betting on myself to be able to gather and lead a team to produce a better product to enter an existing market. Bureaucracy is my biggest enemy.
Business is not about enemies. Business is about identifying a market niche and supplying goods or services to fill that need, AT A PROFIT.
Therefore, you have to identify what the need is, who needs it, and how much you need to charge to be profitable.
Your biggest enemy is you (and I mean this generically for all people considering a business venture) because you will be overly optimistic about how much you can sell, and will fail to adequately prepare financial statements to see if your ideas will work.
You've just gotten some excellent advice on what you need to look at to start a business. Your next steps should be to hit the web and become familiar with business plans and financial statements. After that, you need to do your research about your assumptions about your market, your product, and your competition.
@taxico
It wouldn't have mattered. I left the country for three years and any PR status I cloud have gotten will be nullified. No use beating on the past, as the people say, "the rice has turn to porridge" or something.
Anyway, the US is even worse as AFAIK, they don't have any scheme that looks like the "EntrePass" at all. I recently read that some congressman is drafting a bill to introduce something of this nature though. Won't be done in 2-3 years time.
! Probably in a new thread.
